Potato trade with the island of Ireland and what sectors may be most at risk on EU exit

Tuesday, 8 December 2020

Following on from my article reviewing the policy change that we face from EU exit and how the potato industry can prepare, this article outlines what we currently know about trade with Northern Ireland (NI) and the Republic of Ireland (ROI). It reviews what sectors may be most at risk upon new trading rules on 1 January 2021.

Concerns leaving the EU

A trade deal has not yet been secured with the EU and in turn, this is causing some uncertainty for potato growers and exporters on access to both NI and the ROI. As discussed in my policy review article, checks on goods to ensure tariffs are paid and EU standards are met will create a regulatory and customs border across the Irish Sea.

Preparation will be key for exporters to meet all the new requirements for trade, including Plant Health Regulations. At present though, the UK has not been granted third country equivalence therefore export of fresh potatoes to the EU and NI alike will cease at the end of the transition period if this is not agreed.

To analyse potential impact, understanding the supply chain in its current form can help to identify potential changes from 1 January 2021.

On Thursday 10 December the government published the December Northern Ireland Protocol command paper. Within this paper there are two clauses referring to movement of pre-packaged products for retail sale solely in Northern Ireland via “authorised traders” such as supermarkets and their trusted suppliers. Within clause 33 it states that such goods would be subject to a grace period, through to 1 April 2021.

However, on 16 December, the government has confirmed that from the 1 January 2021, you cannot export or move prohibited commodities, including GB high-risk plants, seed potatoes and ware potatoes to the EU or Northern Ireland. These prohibitions fall into 3 categories: high-risk plants, seed and other propagating materials and prohibited plants. For more information on the Gov website, follow this link.

Therefore if the UK is not granted third country equivalence before the 1 January 2021, seed or ware potatoes will not be able to move into Northern Ireland. See “Phytosanitary regulations, what do we need to know?”.

Potatoes entering the island of Ireland

GB potatoes often enter both NI and ROI in separate shipments although sometimes will transition between the two. As of the 1 January, exporters will face additional phytosanitary regulations. As things stand, they will also face tariffs as goods pass through the regulatory and customs barrier of the Irish Sea. Where potatoes enter NI directly and remain in NI, potential tariffs may be repaid due to the Internal Market Bill protecting NI of such regulations. However, details are yet to be fully clear.

What sectors are most at risk?

Currently, we cannot quantify exactly how much moves into NI because of the lack of any border controls. So, this section focusses on exports to the ROI quantified using HMRC data.

The ROI is an important destination for potato exports. Annually, c.185.7Kt (raw equivalent) of potatoes are exported from all sectors to ROI. Based on raw equivalent figures, the fresh, frozen, and crisped sectors each equate to c.30% share of the exports heading into ROI from the UK.

Fresh potato exports (including packing, chipping and processing material but in fresh form)

Making up almost a third of potato exports to the ROI, exporters of fresh potatoes and growers for this export market should be aware of upcoming changes coming on the 1 January 2021. Despite seasonal changes, the ROI is an important export destination for the UK and this is reflected below.

Anecdotally, fresh exports move to both NI, sometimes for processing before moving across the border, or directly to the ROI. On leaving the EU, and dependent on decisions surrounding the Internal Market Bill, exporters will face changes to regulatory certification and potentially cost implications due to tariffs and extra certifications when exporting across the Irish Sea whether this is to NI or ROI.

With a great deal of pressure to secure a deal suitable for industries across the UK, a multi-faceted deal is ultimately difficult to iron out. However, as we wait, understanding the destination and end customer for potato products will be vital to navigate tariffs and whether this can be reviewed to reduce costs. A list of the current tariff rates for potatoes and potato products in the event of no trade deal can be found on our website.

How can we prepare when the outcome of negotiations is not decided?

What we do know, is on the 1 January regulations will change the way that potatoes move to both NI and the ROI. Awareness of potential tariffs, alongside the requirement to fulfil phytosanitary certification to export across the Irish Sea is knowledge we can use to prepare.

Carefully planning logistical operations and exports needs to be done to ensure full compliance with the new rules coming into force on 1 January 2021.

As part of that planning process you can apply for a UK Economic Operator Registration and Identification (EORI) number. Your business (as an exporter) will need this from 1 January 2021 regardless of trade negotiations outcome. You can also look into agents to make declarations on your behalf and gain understanding on what these declarations are

The state of play is changing all the time, so keep an eye on information coming from the government to understand these changes. We will also endeavour to inform the industry of negotiation progress when relevant.

Additional information

Megan Hesketh

Analyst

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